The percentage of sales method calculates bad debts expense as a percentage of net credit sales.

Name: The percentage of sales method calculates bad debts expense as a percentage of net credit sales.
Brand: Quizplus
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Quizplus · Accepted Answer

The percentage of sales method does indeed calculate bad debts expense as a percentage of net credit sales. This method assumes that the amount of bad debts will be proportional to the level of credit sales. It is a simplified way to estimate the bad debts expense for the period.

The Percentage of Sales Method Calculates Bad Debts Expense as a Percentage